CALCULATION OF BETA OF NTPC LIMITED AND ITS SIGNIFICANCE
NAME OF THE AUTHOR: Nikita Kopulwar
INTRODUCTION
NTPC is India’s largest power utility with an installed capacity (including JVs), plans to become a 130 GW company by 2032. Established in 1975, NTPC aims to be the world’s largest and best power major
OBJECTIVES
To calculate beta of NTPC Limited and its significance
DATA COLLECTION
Data of NTPC Limited from 01-12-2021 to 30-11-2022 from NSE website
• Friday weekly closing prices has been found out
• Weekly Return have been calculated with the formula of (Y2-Y1)/Y1*100
• Weekly Return of Equity have been regressed on Weekly Return of Nifty
DATA ANALYSIS
Weekly Return of NTPC= 1.14 + 1.45 Weekly Return of Nifty + E
• t-stat = 7.1521
• R2 = 0.491
• F = 51.763
• N = 49
The above equation tells us the relationship between Weekly Return of NTPC and Weekly Return of Nifty. The positive sign means that there is a direct relationship. If nifty rises, equity rises and if nifty falls, equity falls. The co-efficient of weekly return of nifty is 1.565, which means if nifty rises by 1 unit, NTPC will rise by 1.565 units and vice versa.
Number of Observations are 49 and t-stat is 7.1521.
P value is 0, which is less than 0.05, means that b is statistically significant at 5%. Even it is less than 0.01, b is statistically significant at 1% level.
R2 is 0.491, which means that 49.1% of Y (NTPC) is explained by X (nifty), balance of 50.9% is error. Error is due to the variables which are not in the model.
F is 51.763, the P value for which is 0 < 0.01, means overall the model is statistically significant.
CONCLUSION
Since b = 1.465 is greater than 1, it is statistically significant.
NTPC Ltd. is a good option for investment because for every increase in nifty there will an increase in the equity of NTPC.